NOTE RE NORIEGA REACTING CAUTIOUSLY TO ANNOUNCEMENT THAT US WAS TIGHTENING ENFO

Created: 8/14/1989

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CIA believes Noriega would react cautiously to an announcement that the US was tightening enforcement of the existing sanctions. On the political front, he almost certainly would play up the mcve as another example of US "aggression" against Panama and might seize upon the prospect of new economic hardships to Justify postponing any new elections, for example.

On the economic front, we wouldower key response. Ci-ven his careful treatment of US businesses to date and hls_recognition of their important role in Panama's economy, 'h* doubts he would take drastic steps such as expropriation in reaction to tightened sanctions. Texaco could be the exception to this, given the criticsl role of the refinery, but the regime might try to workLibyan-style" accommodation wherein Texaco's interests were placed "in escrow" for the time being. In our view, he is more likely to harass employees of the Canal Commission or try to seize some property, euch ae housing rented out or owned by US firms for its American executives, to retaliate for stricter enforcement.

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